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Ahead of and during the UN Climate Summit at Katowice, the usual warnings were heard, saying that a reduction in global carbon emissions was urgently necessary. However, these political calls are much too vague. Instead, the most inconvenient message remains unsaid: The technologies which are available today and in the foreseeable future will, in all probability, prove insufficient to counteract climate change to the necessary extent and with the necessary speed and, at the same time, allow households to stick to their consumption patterns and continue with the well-established division of labour along international production chains. [more]

The 0.2% qoq drop in Q3 GDP was, of course, largely due to the WLTP effect, but underlying growth has also clearly slowed in 2018. After mustering 1.6% in 2018, we expect German GDP to expand by 1.3% in 2019. Growth should be only marginally higher in 2020, despite a strong positive working day effect, as a further slowing of the global economy and EUR appreciation will provide considerable external headwinds. [more]

Since the rally in 2017, the buzzwords bitcoin and blockchain have been omnipresent in the public. Still, the understanding of how much potential the technology actually offers is often rudimentary. To shed more light onto the discussion, we discuss the manifold technological facets as well as the social changes that might come on the heels of the technology. After outlining the utopia, we point out the technical as well as the social hurdles that are standing in the way of the revolution. [more]

Steady growth in air transport is leading to capacity bottlenecks, both in terms of available planes and at individual airports. Capacities will need to be increased, which means that more money must be earmarked for fixed-asset investments as well as labour and operating expenses. Taken together, the growing pains in the aviation sector and the rise in jet fuel prices may prove an overwhelming chal-lenge for some market participants. Air transport growth has also resulted in higher capacity utilisation in related sectors, such as tourism (the “overtourism” phenomenon comes to mind). There are, in fact, discussions about limiting or redirecting visitor flows. [more]

This edition reviews recent market moves and outlines Deutsche Bank Research's key views moving forward. Read on for our recap of the global macro outlook, key recent/upcoming political developments (US election, Brexit, Italy, etc.) and major risks in the rest of 2018. Find also our views on the Fed, the ECB, and all major asset classes. [more]

Tensions in financial markets have increased significantly since the populist/Eurosceptic Five Star/League in Italy took power in May and presented a budget in violation of EU rules. In an unprecedented move, the European Commission sent Rome back to the drawing board. Italy has now provided the Commission with its latest fiscal plan – which is not much different from the old plan. [more]

German exporters have had to deal with numerous challenges over the last few years. Exports to the UK, Russia and Turkey have been unusually volatile and trended downwards. Nevertheless, aggregate German exports rose by more than 3% p.a. in real terms between 2012 and 2017. Since the beginning of 2018, the trade conflict between the US and China has steadily intensified. The challenges might spread and turn into a global problem if the US begins to levy import tariffs on additional imports from China and/or increases existing tariffs. Doing so would probably cause the Chinese authorities to respond in kind. [more]

With digitalisation becoming an ever more common feature along the value chain, the German industry looks set to enjoy higher potential growth in the coming years. The additional gross value added in German manufacturing might total EUR 70–140 bn for the years between 2018 and 2025. As a rule, the industrial sector is in a better position than numerous (personal) services sectors to benefit from the favourable impact of digitalisation. Traditional capital goods producers, such as the auto industry or mechanical and electrical engineering, are likely to see their gross value creation benefit more strongly from digitalisation than the metals or chemicals sector. [more]

GDP stagnation in Q3 – 2019 forecast lowered to 1.3%. Despite signs that the WLTP effect is subsiding the recovery looks set to be slow. Export expectations and business sentiment in general have become more clouded on the back of the US/China trade conflict, the problems in the EMs and overall heightened economic uncertainty. Whilst we expect the economy to get back on track in the winter half-year, expansion rates well above potential have become unlikely in 2019. We have therefore trimmed our 2019 growth forecast to 1.3% (1.7%). (Also included in this issue: Auto industry, labour migration, the race for Chancellor Merkel’s succession) [more]